Unit 2 Test

Question 1

Know the 5 types of Savings accounts and the difference between them:

Answer 1

Regular- Traditional savings at a local bank

Online- No in person branches; higher interests rates

Certificate of Deposit- (CD)- Can write checks and quicker access to money

Individual Retirement Account (IRA)- Long term savings account used for retirement.

Question 2

What are some effective strategies for saving?

Answer 2

Pay yourself first, Emergency fund, Automatic transfers, Set percentage

Question 3

Know the difference between debit and credit:

Answer 3

Debit (-) subtract from the account balance

Credit (+)

Question 4

Which transactions debit and which transactions credit the checking account?

Answer 4

Debit transactions: purchases, transfers out of checking bills, writing a check

Credit transactions: Deposits, transfer from savings, returned merchandise

Question 5

Online banking… what are some of the features/advantages?

Answer 5

View transactions, pay bills deposit checks, check balances, lock/unlock card, transfer money

Question 6

FDIC/NCUA insurance covers up to how much money?

Answer 6

$250,000

Question 7

If you opt out of overdraft protection, what will happen when you go negative in your account?

Answer 7

Your card will be declined

Question 8

If you say yes to overdraft protection, what will happen when you go negative in your account?

Answer 8

The bank charges you an overdraft fee for each transaction

Question 9

What are guidelines and examples of short, medium, and long-term goals?

Answer 9

Short term- (0-2 months)- cell phone

Medium term- (2 months- 3 years)- college tuition

Long term- (3 years and longer)- down payment on a house

Question 10

What does living paycheck to paycheck mean?

Answer 10

Barely covering expenses and not having any extra; no savings

Question 11

What is the difference between checking and saving accounts?

Answer 11

Checking-everyday purchases and short-term; Savings- long term saving with a specific goal in mind

Question 12

What are downsides of being unbanked?

Answer 12

What is purpose of a bank statement and how often does it get generated?

Question 13

What items are on the bank statement?

Answer 13

Balances purchases, deposits, fees

Question 14

What is the purpose of a banking agreement?

Answer 14

To show all the terms of a banking account- fees and extra costs incurred

Question 15

In your opinion, which savings account is the best to use?

Answer 15

Online because it has the highest interest rates

Question 16

How will setting up an automatic transfer to savings be helpful to someone?

Answer 16

Ensure you always have enough funds your the account to cover any withdrawals.

Question 17

Why is it important to check your bank statement on a regular basis

Answer 17

may keep you informed about your financial transactions, help protect against fraudulent activity

Question 18

Why is it important to read the banking agreement?

Answer 18

provides an opportunity for businesses to pass on certain risks to the consumer.

Question 19

Identify 2 fees that banks charge on a checking account and how to avoid them.

Answer 19

Overdraft fee- Disable overdraft protection, have enough money to cushion your account

Out of network ATM fee- Get cash back. Find in-network ATMs

Question 20

You must address the following in your response:
Ask questions to the bank
2 suggestions on how to manage the account
How to start saving and good strategies to achieve this goal

Answer 20

Do they have an online banking mobile app
Check Your Account Balance Routinely.
Set Up Direct Deposit.
Sign Up for Banking Alerts.
record expenses, cut down on spending, set saving goals, include savings in your budget.